When a Subscription Alone Is No Longer Enough

Streaming services began as a simpler and cheaper alternative to traditional television, but the picture has changed. Subscription prices are rising, advertising has become more prevalent, and some users are paying more for an experience they do not necessarily feel has improved.

For me, what is interesting here is not the price increases themselves, but why streaming companies are changing their revenue models.

What does a company do when attracting millions of new subscribers becomes more difficult, while investors still expect revenue to keep growing?

When Subscriber Growth Slows

Some platforms have already reached enormous scale; according to The Guardian, Netflix has around 325 million subscribers worldwide, while Peacock’s monthly users have surpassed 40 million.

As the customer base grows, maintaining the same growth rates becomes more difficult.

This is where the financial equation begins to change. Instead of relying solely on adding new subscribers, a platform can try to generate more revenue from existing users, either by raising subscription prices or offering ad-supported plans.

In other words, the question shifts from: How many subscribers can we attract? to: How much revenue can we generate from each subscriber?

A Higher Price—but How High?

Raising prices seems like one of the simplest ways to increase revenue, but it carries an obvious risk: customers may decide that the service is no longer worth the cost.

The figures cited in the article indicate that around 39% of Americans canceled a streaming service in the past six months amid what has become known as “streamflation.” The cost of subscribing to six major streaming services is also estimated at around $120 per month.

The striking example is Disney+; its annual subscription cost around $70 at launch, while it has since reached $190—an increase of nearly 170%.

This is where pricing sensitivity comes into play: an increase may raise revenue from customers who stay, but it may also drive other customers to cancel.

Advertising as a Second Revenue Source

The other solution is advertising.

Instead of relying on subscriptions alone, a platform can generate revenue from both the subscriber and the advertiser at the same time. This explains the growing interest in cheaper ad-supported plans.

But even this model requires balance. Increasing the number of ads may raise revenue, but it can reduce the quality of the user experience and, as a result, affect the platform’s ability to retain subscribers.

What Does the Accountant See?

A viewer may see that their subscription has increased by a few dollars or that there are more ads, while the accountant sees a different set of metrics: revenue per user, content production costs, advertising revenue, churn rate, and profitability.

In my view, the real challenge for streaming companies is no longer simply increasing the number of subscribers, but increasing the value of each subscriber without driving them away.

Raising prices and increasing advertising may improve revenue today, but if they lead to higher churn, the short-term gains may come at the expense of future customer value.

So perhaps the more important question is not: How much can a platform raise its subscription price? but rather: How much can a customer pay before deciding that the content is no longer worth the price?